By Emma Ujah, Abuja Bureau Chief

MANAGING Director of the Development Bank of Nigeria (DBN), Mr. Tony Okpanachi, has said that his organization would systematically bring down interest rate on loans to Micro, Small and Medium Enterprises (MSMEs), in the country. Okpanachi who signed a N5 billion partnership agreement with three microfinance banks in Abuja to commence DBN lending operations, said that lessons had been learnt from defunct Development Finance Institutions (DFIs) and that as such DBN has been modeled to operate on a sustainable basis. His words, “We know that some of the DFIs in the past started well but they are no longer in the market. DBN is modeled to be operate on a long-term and on a sustainable basis.   For it to be sustainable you have to financially build yourself up. There is a difference between intervention funds that you bring in for a particular purpose to achieve certain things for a period of time and a long-term funding we are providing, which is for a longer term. The idea is for DBN, 50, 60 years down the line, like any other reputable international DFI to be available for funding.”

Okpanachi said the model of the bank would enable it lend on long-term basis, rather than the current short-term lending in the segment, provide Partial Credit Guarantee for the loans , as well as, train partner finance institutions on MSMEs lending, stressing, “Three ways DBN is going to impact on the MSMEs are: our approach is to affect the interest rate in a systematic way; systematic because, if you are going to provide long-term fund, there is no way it will not bring the interest rate down. Secondly, why do commercial banks, MFBs price MSMEs high?

“It is because they think the risk is higher. So if DBN is going to provide Partial Credit Guarantee, share the risks with the banks, obviously, it make them to bring down the interest rate. Thirdly, for some of them (banks), they don’t even understand the business of MSMEs, because of that, they are running away from them. So in building capacity, training them (banks) on how to lend to the sector, they will be more encouraged, relaxed and they are going to price them (MSMEs) appropriately.”